TIRUPATI ENGINEERS AND CONTRUCTIONS,SANGRUR V. ITO, SANGRUR

ITA 138/CHANDI/2025

AI Insights

The case involves Tirupati Engineers and Constructions, a partnership firm, appealing against the order of the CIT(A) which upheld the additions made by the AO. The additions included Rs. 4,19,620 as commission income and disallowances of salary and interest to partners, based on the AO's finding that the firm provided accommodation entries and did not engage in genuine business. The CIT(A) dismissed the appeal due to non-compliance by the assessee in attending hearings or submitting written submissions. The Tribunal found that the CIT(A) erred by not adjudicating the appeal on merits and solely dismissing it for want of prosecution.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 793600 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 27-01-2025
• Other Referred Cases: CIT v. Kanpur Coal Syndicate (53 ITR 225)
• Laws Referred To: Income Tax Act
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: VIBHOR GARG; C.A
• Keywords: Set aside; Business income; Opportunity of being heard; Principle of natural justice; TDS; Accommodation entries
• Section: 147; 148; 143(3); 44AD

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: VIRTUAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 138/Chd/ 2025 िनधाŊरण वषŊ / Assessment Year : 2012-13 Tirupati Engineers and Constructions C/o N.K. Garg Advocate Railway Road, Sangrur, Punjab - 148001 बनाम The ITO Ward, Sangrur ˕ायी लेखा सं./PAN NO: AAEFT9240M अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Vibhor Garg, C.A राजˢ की ओर से/ Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr. DR सुनवाई की तारीख/Date of Hearing : 23/09/2025 उदघोषणा की तारीख/Date of Pronouncement : 23/09/2025 आदेश/Order PER LALIET KUMAR, J.M: This is an appeal filed by the Assessee against the order of the Ld. CIT, Appeal, Addl/JCIT(A) Gwalior dt. 09/01/2025 pertaining to Assessment Year 2012-13. 2. In the present appeal Assessee has raised the following grounds: 1. That the impugned order is bad both on facts and law. 2. That the Ld. CIT(A) has wrongly and illegally upheld the additions of Rs. 4,19,620/- made by the AO by passing an exparte order without allowing the appellant an opportunity of being h eard against the principle of natural justice. 3. That the Ld. CIT(A) erred in upholding the assessment order made by the Ld. AO ignoring the facts and circumstances of the case by passing an exparte order in a mechanical manner without ensuring proper service of hearing notices. 4. That the Ld. CIT(A) erred in upholding the addition of Rs. 4,19,620/- against the facts and circumstances of the case after ignoring that the appellant has filed the ITR under the deeming fiction of section 44AD and has declared the receipts in the ITR. 5. That the Appellant craves permission to add, amend, elucidate any ground of appeal at the time of hearing. 3. Briefly, the facts of the case are that the assessee is a partnership firm, in response to notice under section 148 of the Income Tax Act, filed its return of income on 01.10.2019, declaring income of Rs . 7,140/- for AY 2012-13. The case was Printed from counselvise.com 2 reopened and assessed under section 143(3) read with section 147 on 30.12.2019 by the AO, who determined total income at Rs.4,19,615. The AO concluded that the firm had provided accommodation entries to S.P. Singla Construction group and assessed the amount as commission income, further disallowing salary and interest to partners. 3.1 The AO held that the assessee did not carry on genuine business during the year and was merely providing accommodation entries. On this basis, the AO treated Rs.4,19,615/- as commission income rather than business income, and also disallowed partners’ salary and interest due to absence of a certified copy of the partnership deed. Interest under sections 234A, 234B, and 234D was also levied. 4. Against the order of the Ld. AO the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) submitted that during appellate proceedings, several notices under section 250 were issued but the assessee failed to file any written submissions or attend hearings. Considering repeated non-compliance, the CIT(A) held that the assessee was not interested in prosecuting the appeal. Relying on judicial precedents, it was observed that an appeal requires active prosecution and mere filing is insufficient. As the assessee provided no evidence or arguments in support of its grounds, the CIT(A) dismissed the appeal and upheld the assessment order passed by the AO. 5. Against the order of the Ld. CIT(A) the assessee preferred an appeal before the Tribunal. 6. During the course of hearing the Ld. AR submitted that the order of the CIT(A) is vitiated in law as the appeal has been dismissed merely for want of prosecution, without adjudicating on the merits of the various grounds. It was urged that the assessee had raised serious issues relating to the jurisdiction of reopening, the validity of the notice under section 148, and also the merits of the addition; however, the Ld. CIT(A) chose not to deal with any of them and summarily dismissed the appeal. 6.1 It was contended that the assessee is a small firm engaged in sub-contract work, which had already declared income u/s 44AD and filed its return in response to notice u/s 148. The additions made by the Assessing Officer, ignoring receipts subjected to TDS and without considering the claim of partners’ salary and interest, are unsustainable. Printed from counselvise.com 3 6.2 The AR therefore pleaded that in the interest of justice, the matter may be restored to the file of the Ld. CIT(A) with direction to adjudicate the issues on merits after granting adequate opportunity to the assessee. 7. The Ld. DR, on the other hand, strongly relied on the order of the Ld. CIT(A). It was submitted that, despite repeated notices issued through the ITBA portal, the assessee failed to comply or submit any documents. The Ld. CIT(A) was therefore justified in concluding that the assessee was not interested in pursuing the appeal. 7.1 It was further submitted that the assessee cannot take advantage of its own defaults. Reliance was placed on the principle that an appeal must be effectively prosecuted; otherwise, it deserves to be dismissed. However, the DR fairly left the issue to the discretion of the Bench regarding granting one more opportunity, subject to the imposition of costs, if deemed fit. 8. We have heard the rival contention of both the parties and perused the material available on the record. It is a well-settled principle that the first appellate authority is duty-bound to adjudicate the grounds raised before it on merits and cannot dismiss an appeal for want of prosecution alone. Reference in this regard may be made to the decision of the Hon’ble Supreme Court in CIT v. Kanpur Coal Syndicate (53 ITR 225), which lays down that the powers of the CIT(A) are co- terminus with that of the Assessing Officer. 8.1 In the present case, the assessee has raised multiple grounds, including jurisdictional grounds challenging the reopening. These have not been addressed by the Ld CIT(A). Considering the principle of natural justice and the importance of the issues involved, we are of the view that one more opportunity deserves to be granted to the assessee. 8.2 Accordingly, we set aside the impugned order of the Ld. CIT(A) and restore the matter to his file for fresh adjudication of all grounds raised by the assessee in accordance with law. The assessee is directed to extend full cooperation by filing necessary evidence and written submissions. The Ld. CIT(A) shall provide an adequate opportunity to be heard and decide the appeal by passing a speaking order. Printed from counselvise.com 4 9. In the result, the appeal is allowed for statistical purposes. (Order pronounced in the open Court on 23/09/2025 ) Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. आयकर आयुƅ (अपील)/ The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 6. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "